Undeniably, having a delinquent mortgage is a stressful situation. It becomes even more complicated if you fail to make mortgage payments for several months as it may lead to a default. However, there’s no need to panic because there’re some ways to deal with the situation efficiently. Take a look at the following strategies and choose one that works the best for you.
Explore forbearance options
If your financial problems are temporary, opting for forbearance on the mortgage is one of the most effective options. Forbearance refers to an agreement between you and your lender that suspends mortgage payments temporarily. If the lender agrees to forbearance, you’ll get a specific period of time during which no payment is required. However, once the period is over, you’ll need to continue making mortgage payments while repaying the entire past due amount. Therefore, during this period, you must try your best to save as much as possible so that you can clear the entire past due at the beginning of the repayment period.
Refinance your mortgage
If you can refinance the current mortgage, it could prove to be another effective solution to avoid a default. It’ll help you get rid of the current mortgage and a new loan with new terms will replace it. And the best part is you might get a lower interest rate with the new loan, which will lower the monthly payments making them more affordable.
See if the lender agrees to a repayment plan
Note that before you choose this option, it’s extremely important to assess your finances and determine whether or not you’ll be able to make additional payments alongside your regular mortgage payment. If you can, you may try to convince the lender of a repayment plan. If the lender agrees, you won’t get any grace period where you don’t need to make payments. Rather, you’ll continue making your regular mortgage payments along with an additional amount to repay the past due balance.
Get in touch with HUD
Sometimes, homeowners don’t consider forbearance the right option or their lenders don’t agree to it. If you too belong to this league, contacting the HUD (The Department of Housing and Urban development) might be of great help. It has experienced counselors as staff who’ll review your mortgage status and financial circumstances to devise a solution to help you avoid defaulting on the mortgage. These expert counselors will review the available state or federal programs to see if any of those works for you.
Go for a short sale
If you realize that you cannot continue making the mortgage payments any longer, initiating a short sale would probably be your best option. You’ll sell the house for less than what you owe to the lender. First, you’ll submit an application to your lender mentioning that you’re planning to choose a short sale. If the lender agrees to it, you’ll list the property on the market. Once you receive an offer from a prospective buyer like a real estate investor or a real estate company that says “we buy houses in NJ”, you’ll take it to the lender. If the lender accepts it, the money paid by the buyer will apply to your loan balance. Though you won’t be able to make anything on the sale, you’ll come out of the difficult situation conveniently.
Just remember one thing, whenever you become a delinquent mortgagor, don’t ignore the problem. Instead, address it immediately as delaying will only make it worse.
Source: Bob Vieira, Universal Short Sales